Drivers pay more than $50,000 for a carpark in Melbourne

PARKING fees driving your wallet into the red? Now some Melbourne carparks are worth upwards of $50,0000 — and prices are rising.

Nathan Mawby

Sunday Herald SunMay 5, 20145:32pm

Francis Armstrong in a carpark spaces at a multi-storey garage in South Yarra. Picture: Andrew HenshawSource:News Limited

FORGET free parking.

Melbourne’s average carpark now sells for $50,100, ­according to an industry expert.

Carpark prices have more than doubled in the past decade, according to Francis Armstrong, managing director of findacarpark.com.au.

At the moment. the most expensive carpark on the Melbourne market is a 20sq m space on St Kilda Rd, Melbourne, with a $59,000 asking price tag.

Melbourne prices, though, are still far cry from Sydney, where prices are as high as $180,000 for a single space and up to $330,000 for two in tandem — but prices here will keep rising, according to Mr Armstrong.

“Melbourne is just easier to get around ... because of the grid system you can get away without a carpark on your doorstep, because you have got trams,” Mr Armstrong said.

“(But) the demand is going to go higher as the congestion on our roads grows.”

That demand is being revved up by impressive rental yields on carpark investments.

While the median house in Melbourne has a rental yield of just 3.3 per cent according to RP Data, Mr Armstrong’s ­figures indicate that the up to $4452 annual rent achieved on an average $50,100 carpark can yield of up to 8 per cent.

“Since 2005 carpark prices have doubled in value from an average of $25,000 in 2005 to over $50,000 in 2014,” he said.

With a few carparks to his name Mr Armstrong believes one he purchased for $29,000 in South Yarra in 2007 was now worth nearly $50,000.

But Neil Anderson, director of property advisory at McGrath Nicol and a chartered accountant, said higher yields usually reflected higher risk.

“Yield is a measure of risk, so the higher the yield, usually the higher the perceived risk of the asset,” he said. “And the risk in this case that there’s a lack of data and visibility from an investors perspective.”

He said Melbourne workers were being encouraged to reduce their reliance on cars to access the city, which could have an impact on the value of carpark spaces.